According to Joerg Asmussen, executive board member of the European Central Bank, it is now time for the ECB to begin planning its “exit strategy” from the unprecedented support the bank has used to prop up banks during the recent, and ongoing, debt crisis.
“The time for an exit depends on what happens on the financial markets,” Asmussen said. “It’s clear that it’s still too early, but we must begin preparing our exit very carefully.”
Ever since the beginning of Europe’s critical debt crisis the ECB has utilized “non-standard” practices to contain the damage to the areas financial system.
The most recent intervention was the non-standard measure to bequeath on banks over 1.0 trillion euros (1.3 trillion dollars) in three-year loans at shockingly low interest rates in December and February.
“The conclusion shouldn’t be drawn that, now that we’ve handed out three-year loans to banks twice, we’ll automatically do it a third or fourth time,” Asmussen said.
In response to a question about whether or not Europe is out of the crisis yet, Asmussen replied,
“No. The markets have calmed down since the beginning of the year, but we don’t know whether this calm is deceptive.
“Member states should therefore take advantage of it to press decisively ahead with the necessary reforms.”
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